WASHINGTON/NEW YORK, Jan 11 (Reuters) - The U.S. government
ordered a wide-ranging review of Boeing's latest passenger jet,
the 787 Dreamliner, citing concern over a fire and other recent
problems but insisting the plane was still safe to fly.

It was unclear how long the review will take or how much it
will ultimately cost Boeing, but the company was concerned
enough that it sent a top executive to a Washington press
conference on the problem. Boeing shares fell 3 percent.

The 787 represented a leap in the way planes are designed
and built, but the project was plagued by cost overruns and
years of delays. Some have suggested Boeing's rush to get planes
built after those delays resulted in the recent problems, a
charge the company strenuously denies.

Either way, regulators said a thorough examination was
needed to identify the root cause of the problems, including a
fire on a parked 787 on Monday.

"There are concerns about recent events involving the Boeing
787. That is why today we are conducting a comprehensive
review," Transportation Secretary Ray LaHood told a news
conference followed by more than 100 reporters around the world.

Those concerns notwithstanding, though, LaHood also
maintained the plane was still airworthy.

"I believe this plane is safe and I would have absolutely no
reservations about boarding one of these planes and taking a
flight," he said.

While the FAA launched its review, Boeing customer All
Nippon Airways had a launch of its own, initiating
Dreamliner service between Tokyo and the Silicon Valley hub of
San Jose. Passengers preparing to board shook off any suggestion
they might be worried.

"Whenever there's a new plane there's some breaking in that
comes with it. If the pilot's willing to get behind the stick
and ride the plane, I have a great deal of confidence in the
worthiness of the plane," said Marc Casto, 37, who runs a San
Jose-based travel company.

Boeing shares fell 2.7 percent to $75 in late trading.
Since Dec. 4, when the first of the recent incidents took place,
the stock is up 1.5 percent, underperforming a 4.3 percent gain
in the S&P 500.

Much like the company's customers, who have generally stood
behind it, analysts give the company good marks for its early
response to the crisis.

"Boeing is doing a good job getting in front (as much as a
company can) of the FAA situation. My view is that if the FAA
deems this as a non-design issue, Boeing will be fine. If this
is a design issue, it will be more troublesome because we need
to pause the production to fix the design and then proceed,"
said Morningstar analyst Neal Dihora.

CHALLENGE FOR BOEING'S COMMERCIAL CHIEF

The review will focus on the 787's advanced electrical
systems and cover their design, manufacture and assembly, the
Federal Aviation Administration said.

The move comes on top of a separate probe by U.S. safety
investigators into a battery fire that caused "serious damage"
to an empty Japan Airlines 787 jet at Boston airport on
Monday. Early findings of that probe are due next week.

The 787, the world's first mainly carbon-composite airliner,
is Boeing's boldest effort to revolutionize commercial aviation
by using new technology to cut fuel costs by 20 percent. Each
lightweight jet has a list price of $207 million.

Airlines are pleased with the savings, and have so far given
the plane their approval, both by ordering more than 800 jets
and mostly sticking by it through the current spate of troubles.

After roughly 10 incidents on 787s in six weeks, one jet
suffered a cracked cockpit window on Friday, while another had
an oil leak..

"We also stand 100 percent behind the integrity of the 787
and the rigorous process that led to its successful
certification and entry into service," Boeing CEO Jim McNerney
said in a statement on Friday.

The review is a significant test for the recently appointed
chief executive of Boeing's commercial airplanes division, Ray
Conner, who attended Friday's news conference.

"The redundancies that we have put into this machine are
phenomenal and the airplane performed perfectly in that respect.
Now, we'd like to make sure that none of these happen again, and
that's what we're going to try to do," Conner said.

Those complex systems that Conner referred to are among the
advantages of the 787, but also complicate finding and solving
problems, according to the director of MIT's Aeronautical
Systems Laboratory.

"You now have the interdependencies that you didn't have
before. The systems are much better when they work but they're
harder to guarantee that they will work all the time and it's
harder to predict what will happen when something fails," said
R. John Hansman in an interview.

BOEING CONFIDENCE

As Boeing's 787 comes under review, the company is involved
in difficult labor contract negotiations with its engineering
union, which represents the workers who would be called upon to
solve any problems with the Dreamliner.

On Friday, Boeing made a revised offer that it said would
increase the pool of money available for raises.

Ray Goforth, executive director of the Society of
Professional Engineering Employees in Aerospace (SPEEA),
declined to comment on the FAA review. He said Boeing's latest
offer still included drastic cuts from the contract that expired
in November.

The media storm about the 787 glitches echoes global
publicity a year ago over wing cracks on the A380 superjumbo,
built by Boeing's European rival Airbus.

The A380 has also been deemed safe to fly and few airlines
have reported a dip in bookings, but the problems are expected
to end up costing Airbus up to 500 million euros in repairs.

The 787 Dreamliner made its first commercial flight in late
2011 after a series of production delays put deliveries more
than three years behind schedule. By the end of last year,
Boeing had sold 848 Dreamliners. It now has 50 in service.